ASPIRE 2017 – Entrepreneurial pathways

Presented by Fifth Third Bank, the ASPIRE 2017 conference brings together the region’s entrepreneurial, dealmaking and investor communities for a daylong event filled with dynamic keynote speakers — including Jacobs’ Steven J. Demetriou and ParkOhio Holdings Corp.’s Edward F. Crawford — engaging panel discussions and ample time for power networking.

Join us Thursday, May 18, at the Renaissance Cleveland Hotel. For more information and to register, visit www.regonline/2017aspire.

Entrepreneurs tend to look at the world a little differently than other people.

They see the opportunity in every challenge. Ted Turner didn’t like the limited options for TV news in the early 1980s, so he launched a 24-hour cable news channel called CNN. Sir Richard Branson was frustrated with domestic air travel in the U.S., so he started Virgin America. Irene Rosenfeld couldn’t imagine a world where someone didn’t like Oreo cookies, so she led an effort to reach out to China and develop an Oreo cookie that better fit their taste.

LeBron James didn’t like the way he left things with Northeast Ohio sports fans. So he came back and led the Cavaliers to Cleveland’s first pro sports title since 1964. James has proven himself both on the court and in business in his quest to become a billionaire.

Every entrepreneur takes a different path to achieve success, but they all share some common traits: confidence, a willingness to take risks and the ability to see a need that other people didn’t even realize existed.

We spoke with a number of Northeast Ohio’s most accomplished business leaders to learn about their own motivations to become entrepreneurs. Here is what they had to say.

Carl J. Grassi was 14 years old when he realized he was destined to be an entrepreneur.

“I was caddy for a private country club when the general manager asked if I wanted to run the caddie shack,” says Grassi, chairman at McDonald Hopkins LLC.

The job would require Grassi to source and personally purchase products from various wholesale food and beverage suppliers.

“I quickly learned pricing, quality and service were keys to success,” Grassi says. “A highlight for me was when some of the club members started coming to the caddie shack for a slice or two of my homemade pizza. Ultimately, the general manager said I had to stop selling it because the club was losing business at the snack bar. Funny, but I knew then I wanted to be an entrepreneur.”

André Thornton was retiring from his career as a professional baseball player, but had already begun laying the groundwork for the next phase of his life.

“When we come to transitional periods in our lives, we must access the new opportunities and determine what those new directions mean,” says Thornton, president and CEO at ASW Global. “In discussions with friends about future goals and desires, we decided to combine our talents, abilities and resources to look for the right opportunity to start our own business. After much research, we decided on becoming franchisees for a fast-growing restaurant group out of Kansas City, Missouri.”

It proved to be a profitable venture, allowing for another acquisition that was followed by the acquisition of ASW Global.

“My oldest son was turning 2, my other son was going to turn 1 and my wife was pregnant with our daughter,” says Goldfarb. “So I had two babies and one on the way. If anything convinced me that I needed to be an entrepreneur, it was three kids. I’d been working in public accounting at that time for 12 or 13 years. I knew a lot, but sometimes you need something to really light a fire under you.

“This was the time when I knew I had to put it all together and do something really special to support my family. It was a defining moment in my life.”

On May 1, 1987, SS&G was born and would “grow faster than any accounting firm ever did in the last 30 years,” Goldfarb says. In 2015, the firm became part of BDO USA LLP, where Goldfarb currently serves as Ohio managing partner.

The drive to win
Every entrepreneur takes a different path, but most share similar traits — the desire to build something, the ambition to solve a problem for customers and the willingness to take risks to make it happen.

“I was an average student in high school and college,” says Michael B. Petras Jr., CEO at Sterigenics International LLC. “My kids laugh at my ACT scores compared to theirs. I think it’s my eagerness to learn, my willingness to jump in and I just work really hard. I’m going against guys that are 10 times smarter than me all the time in business. But I try to work hard, learn, do my homework and not lose sense of my values.”

This philosophy has led to great accomplishments for Petras. He’s worked for Jack Welch and Jeff Immelt at General Electric, James McNerney Jr. at Boeing and Dave Calhoun when he was at Nielsen. He put AssuraMed in position to be acquired by Cardinal Health and is now strengthening Sterigenics’ position as a global leader in the sterilization industry.

“I want to win,” Petras says. “I never want to be satisfied. We’re a market leader and I view it that everybody wants our spot and we can’t let that happen.”

Here’s a look at a few of the mergers and acquisitions that have shaped Cleveland’s top business leaders and the approach they take to get a deal done.

Gregory J. SkodaChairmanSkoda Minotti

“Several of us combined the accounting and insurance businesses we owned and merged into a small public company. It was the first time an accounting firm ever, in essence, ‘went public.’ We had extraordinary capital partners and over the next two years, we worked seemingly 24/7/365, built a team and looked at several thousand companies.

“We bought over 130 companies and ended up building a company that had over a $2 billion market cap, over 240 locations and over 5,500 employees. We challenged and changed many of the industry norms of the time. It was quite an experience.

“We were fortunate to make and ride a wave that brought together a tremendous group of partners. This group had a wealth of resources to work with and the friends we made and the education we received was more than we frankly ever dreamed of. The experience and what we each learned made us very different business people. The number of people that have been impacted by that journey then and now is staggering. We have very different views of building, growing and exiting businesses.”

Philip Alexander
CEOBrandmuscle Inc.

“Two weeks after I launched Brandmuscle Inc., I was offered the opportunity to present my idea to AT&T Wireless, then one of the biggest advertisers in the country. The telco wars were in full swing with strong competitors like Bell Atlantic, Nextel, Sprint, T-Mobile, etc. With a group of ‘supporters’ who eventually became Brandmuscle associates, we presented to AT&T hoping for no more than validation and feedback for our idea, and with little hope of winning the business since we hadn’t yet written a line of code.

“AT&T Wireless loved the idea so much that they agreed to underwrite the launch of the solution. We closed a deal on our very first presentation. While a success, it misled us into thinking that this entrepreneurial thing was going to be a layup. It actually was pretty tough as we faced down the typhoon that was 2001 and the collapse of the dot-com world.”

Mark Goldfarb
Ohio managing partnerBDO USA LLP

“It’s the early ’90s and our business is growing. I meet an accountant who was kind of on his own and did a lot of special work in the medical health care field. I met with him and thought we should merge our practices. We did a lot with physicians at that time. This CPA, who was a real solid professional, he said, ‘I don’t want to merge, I like being on my own.

“But I’ll sell you all my clients that aren’t medical related.’ So for a very nominal amount, we bought a group of clients that weren’t in the health care field. Some of them were great businesses that turned into incredible clients for SS&G for years to come that allowed us to grow our business and hire people.

“Then a couple years later, very sadly, this gentleman passed away. We had dealt with him honorably and honestly, so his wife approached us to buy what was left of his health care practice. It was a small practice of six employees and maybe half a dozen clients. We bought that and turned it into SS&G Healthcare Services, which is now called Medic Management Group. It’s a business we still own and it’s not part of BDO. It has 250 employees in 25 states. One of the clients that we bought from this gentleman happened to have an expertise in the wealth management world.

“With the help of that client, we started SS&G Wealth Management over 20 years ago, which today is one of the largest boutique wealth managers in Northeast Ohio. From this one meeting with this sole practitioner, so much came out of that — clients that we bought that helped grow the firm and add employees. From that one initial meeting, we ended up with two vibrant businesses. When people call you, even though you’re busy, you should meet with everybody. You just never know where it may lead.”

“One example was a transaction not done. As an adviser, I recall getting a call from two business partners of an acquiring company I was advising on a transaction. They asked that I accompany them to a Chicago hotel room to help remove a third partner from a negotiating session that he’d elected to have on his own. As context, the parameters of the transaction had evolved to the point it didn’t make sense. We’d moved beyond our ‘walk away’ line.

“The third partner, being emotionally invested, had spent two days in continued discussion with the seller in a hotel conference room and the other owners feared that, exhausted and emotionally attached to the point of rationalizing, he was going to break down and make a bad deal that would destroy value. They couldn’t get him to walk away. Lessons learned included the power of emotion and the danger in rationalizing terms from a point in time.

“I’ve seen people get so invested in the emotion of a transaction that they accept evolution of terms, conditions, diligence parameters, etc. without reason as they simply ‘have to close.’ There is always a line between good value and a bad transaction. It’s important that one defines it early so as not to have it clouded by inertia and the desire to ‘get it done.’”

The trusted adviser

As David M. Kall was studying to become an attorney, he understood the value of a strong tax background.

“I didn’t just want to be solely a tax professional,” says Kall, managing member of the Cleveland office for McDonald Hopkins LLC. “Ultimately what I wanted to be was that trusted adviser for the business owner. What I realized early on in my career was there are not a lot of attorneys who have that tax background.

“When you’re sitting there trying to advise a business owner as far as what to do in connection with a specific transaction or what to do in order to grow your business, how can you give that advice without knowing the tax consequences?”

Kall isn’t an entrepreneur, but he’s worked with many people who are to help them grow their businesses.

“When I’m sitting there advising early-stage companies, my goal is to be involved with companies,” Kall says. “When we look at our jobs as attorneys, there is no greater satisfaction than taking a company from the beginning all the way to what that perceived end would be. You can be that trusted adviser so they can ultimately turn that business into something meaningful for either themselves or their families.”

Listening is one of the most important traits of a good business adviser, he says. Entrepreneurs often have big dreams and lots of ways to realize their grand visions. It’s incumbent upon the adviser to take it all in and offer thoughtful, measured feedback in return.

“You never want to say you can’t do it,” Kall says. “What you want to be able to do is listen to what they have to say, but then based on your experience, equate that situation to something you’ve seen in the past. ‘I’ve seen it done this way before. This has been helpful. This has not.’ Ultimately, it’s the business owner that has to make the decision on how to proceed.

“Our job as that trusted adviser is to be someone who can sit there, listen to what the client wants, but then also give meaningful insight into what may or may not work and ultimately let them make the decision. It’s not our business, it’s theirs. You hope they take your advice to heart as they try to grow their business.” ●

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